bab year 2, management accounting.

MANCOSA: BBA YEAR 2 QUESTION5 REQUIRED Use the information provided below to answer the following questions: 5.1 Calculate the Payback Period of Project A (answer expressed in years (20) days). Calculate the Accounting Rate of Return (on average investment) of Project B expressed to 2 decimal places). 5.2 (answer Calculate the Net Present Value of each project (with amounts rounded off t nearest Rand). d off to the 5.3 5.4 Using your answers from question 5.1.3, which project should be chosen? Why? 5.5 Calculate the Internal Rate of Return of Project B (answer expressed to 2 decimal places). INFORMATION Imbonini Limited has the option to invest in machinery in available to invest in projects A and B but finance is only one of them. You are given the following projected data: PROJECT A PROJECT B Initial cost Net cash inflows: 300 000 300000 Year 1 Year 2 Year 3 Year 4 Year 5 70 000 90 000 110 000 100 000 70 000 88 000 88 000 88 000 88 000 88 000 Additional information 1. Project A machinery will be disposed of at the end of year 5 with a scrap value of R40 000 included in the figures above). 2. Project B machinery will be disposed of at the end of year 5 with a nil scrap value. 3. Depreciation is calculated on a straight-line basis. 4. The minimum required rate of return is 12%